New wind tax will provide big revenues to municipalities

A recent report shows that a new taxation model may provide municipalities in Norway an annual income of over two billion from land based wind power.

According to estimates by Statnett, Norway will have to increase the consumption of renewable power by 80 TWh in order to be fully electrified. If land based wind is developed to constitute 50 TWh of the total, Norwegian host municipalities may receive income of 2.2 billion annually.

On assignment from Norsk Vind, the country’s largest private developer of wind power on land, NyAnalyse, an economic research firm, has calculated how the income of the host municipalities for land based wind power, will be affected if wind power development is scaled up. The report from the economic analysis firm shows that the local revenues, including the counties, will amount to NOK 2.3 billion annually by developing 50 TWh of wind power on land.

In the report, Villeman Vinje, a Partner and Senior Economist, points out how important renewable power may be for the development of the welfare state of tomorrow, in addition to the climate benefit.

- Norway needs more renewable energy to reach the climate objectives. If more of the value creation is to for the benefit of the host municipalities, it may help to reduce the level of conflict. Municipalities may end up seeing wind power as an opportunity, not a disadvantage, says Villeman Vinje.

He points out that Norway has the innate prerequisites necessary to play an important role in the conversion to renewable energy.

New tax system

The basis for the calculations by NyAnalyse, is a proposal to introduce three new tax schemes for land based wind power, inspired by the taxation of water power. The first of these entails a natural resource tax being redistributed from the central government to the municipalities.

A further proposal is a licensing tax and compulsory yield of land based wind power to the host municipalities. The purpose of the compulsory yield of power is to contribute to stable income for the host municipality by the power being sold or used to attract companies and jobs. The licensing tax is supposed to act as compensation for the negative local impact of wind power, and increase the total tax level for land based wind power.

“If the economy is restructured into a zero emission economy, as both the government and the opposition agree, it will require a drastic shift in how we organise and arrange the economy. Wind power on land may play a key role in this puzzle”, says Mr. Vinje.

Norway's emissions of greenhouse gases are going in the wrong direction. The development of wind power will contribute to reversing it. The models maintained by Statnett show that a more extensive electrification of Norway will cut the current domestic emissions of greenhouse gases in half.

Contact:

NyAnalyse, Partner and Senior Economist, Villeman Vinje mob: 99246635 e-mail: vinje@nyanalyse

Norsk Vind, General Manager Per Ove Skorpen, mob: 95160005, e-mail: skorpen@vind.no

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